Pro Mach, Norit break; DEI modifies structure; Vertafore sets talk; Capsugel firms launch

By Sara Rosenberg

New York, July 6 - Pro Mach Inc.'s credit facility hit the secondary market on Wednesday, with the term loan B quoted higher than its original issue discount price, and Norit Holding started trading as well.

Over in the primary market, DEI Holdings Inc. reworked its credit facility structure, downsizing its first-lien term loan while flexing pricing higher and adding a second-lien term loan to the transaction.

Additionally, Vertafore Inc. released price talk on its term loan add-on as the deal was presented to lenders during the session, Capsugel nailed down timing on the launch of its credit facility, and Q9 Networks Inc. surfaced with new deal plans.

Pro Mach frees up

Pro Mach's senior secured credit facility (B2/B+) began trading early in the day, with the $220 million six-year term loan B quoted at 99½ bid, par offered on the open and then it moved to par bid, par ½ offered, according to traders.

Pricing on the B loan, as well as on a $35 million five-year revolver, is Libor plus 475 basis points after firming recently at the wide end of talk of Libor plus 450 bps to 475 bps. The term B has a 1.5% Libor floor, was sold at an original issue discount of 99 and includes 101 soft call protection for one year.

Barclays Capital Inc. led the $255 million deal that was used to fund the company's buyout by the Jordan Co. from Odyssey Investment Partners LLC - the completion of which was announced Wednesday.

Leverage is 4.5 times senior secured and 4.4 times net total.

Pro Mach is a Cincinnati-based provider of packaging machinery services and related aftermarket products to clients in the food, beverage, household goods and pharmaceutical industries.

Norit tops OID

Norit's credit facility also broke during the day, with the $260 million six-year first-lien term loan quoted at 99 1/8 bid, 99 5/8 offered on the open and then moving up to par bid, par ½ offered, according to a trader.

Pricing on the term loan, as well as on a €75 million six-year first-lien term loan, is Libor/Euribor plus 525 bps with a 1.5% Libor floor, and the debt was sold at an original issue discount of 981/2. The first-lien loans (B1/BB-) include soft call protection of 102 in year one and 101 in year two.

During syndication, the U.S. term loan was upsized from $230 million, pricing was flexed up from talk of Libor plus 450 bps to 475 bps, the floor was increased from 1.25%, the discount widened from 99, and call protection was sweetened from just 101 for one year.

Deutsche Bank Securities Inc. and Goldman Sachs & Co. are the lead banks on the deal for the Netherlands-based producer of activated carbon and related services.

Norit funding dividend recap

Proceeds from Norit's roughly $420 million credit facility, which also includes a $50 million revolver (B1), will be used to fund a distribution to shareholders and refinance existing debt.

Originally as part of the transaction, the company was planning a $110 million 61/2-year second-lien term loan that was talked at Libor plus 825 bps with a 1.25% Libor floor, an original issue discount of 98½ and call protection of 103 in year one, 102 in year two and 101 in year three.

However, this second-lien loan was removed at the time of the pricing changes to the first-lien term loans. With the elimination of the second-lien, the dividend amount was reduced, and then with the first-lien upsizing, it was increased.

Total leverage under the final structure is 4.35 times versus 4.0 times after the removal of the second-lien loan and 5.3 times before.

DEI revises deal

DEI Holdings made a number of changes to its credit facility, including reducing the size and raising pricing on its first-lien bank debt, and providing for a new $46.8 million 61/2-year second-lien term loan, according to a market source.

The first-lien debt now consists of a $30 million revolver, a $130 million six-year first-lien term loan and a C$15 million six-year first-lien term loan, the source said. Previously, the first-lien term loan was outlined as being a $175 million tranche.

Pricing on the revolver and first-lien term loan is Libor plus 550 bps, up from Libor plus 450 bps, while the 1.5% Libor floor and original issue discount of 99 were left unchanged, the source continued. There is 101 soft call protection for one year on the first-lien term loans.

Meanwhile, the second-lien term loan is talked at Libor plus 850 bps with a 1.5% Libor floor, the source remarked.

DEI backing acquisition

Proceeds from DEI's credit facility will be used to help fund the already completed buyout of the company by Charlesbank Capital Partners for $4.46 per share in cash. The total enterprise value of the transaction, including debt assumption, is roughly $305 million.

At first, Charlesbank was offering to buy the company for $3.79 to $3.81 per share in cash, for a total enterprise value of about $285 million, but this offer was later increased.

GE Capital Markets and Oppenheimer & Co. Inc. are leading the senior secured deal.

Other funds are coming from $121 million of equity, increased from $95.8 million.

First-lien leverage is 3.2 times, down from 3.7 times, and leverage through the second-lien loan is 4.2 times.

DEI is a Vista, Calif.-based designer and marketer of home theater loudspeakers and vehicle security and remote start systems, and a supplier of mobile audio.

Vertafore reveals talk

Vertafore launched a $75 million add-on term loan on Wednesday, at which time lenders were told that the deal is being talked at Libor plus 375 bps with a 1.5% Libor floor and an original issue discount of 98, according to a market source.

Pricing on the add-on is in line with existing term loan pricing, however, the existing loan was obtained early this year at a par offer price.

Credit Suisse Securities (USA) LLC is the lead bank on the deal that will be used to fund an acquisition.

Vertafore is a Bothell, Wash.-based provider of software and information to the insurance distribution channel.

Capsugel timing emerges

Capsugel zeroed in on timing for its proposed $1.07 billion senior secured credit facility with the scheduling of a bank meeting for Monday in New York with a 2:30 p.m. ET start time, according to a market source. The deal was previously described as July business.

The facility consists of a $150 million five-year revolver and a $920 million seven-year term loan B, with price talk not yet available.

Early round marketing on the deal had already begun back in May.

UBS Securities LLC, Barclays Capital Inc., Deutsche Bank Securities Inc., KKR Capital Markets and Mizuho Securities USA Inc. are leading the credit facility that will be used to help fund the buyout of the company by Kohlberg Kravis Roberts & Co LP from Pfizer Inc. for $2.375 billion in cash.

Capsugel plans notes

In addition to the credit facility, Capsugel plans on issuing €325 million in notes for acquisition financing.

The notes are backed by a commitment for a €325 million bridge loan.

Closing is expected in the third quarter, subject to customary conditions, including regulatory approval in certain jurisdictions, such as the United States and the European Union.

Capsugel is a Peapack, N.J.-based manufacturer of hard capsules and drug-delivery systems. The company generated about $750 million in revenue and manufactured more than 180 billion hard capsules in 2010.

Q9 Networks readies deal

Word came out that Q9 Networks Inc. will be holding a bank meeting on Thursday in Toronto to launch a proposed C$446 million credit facility that consists of a C$40 million revolver, a C$276 million first-lien term loan and a C$130 million second-lien term loan, according to a market source.

TD Securities is the left lead arranger and bookrunner on the first-lien debt, and Barclays Private Credit Partners is the lead arranger on the second-lien loan.

Proceeds will be used to refinance an existing credit facility and mezzanine debt, and for a recapitalization.

Q9 Networks is a Toronto-based provider of outsourced data centre infrastructure for organizations with mission-critical IT operations.

INC extends deadline

In other news, INC Research LLC is now asking for commitments towards its $425 million credit facility (Ba3/B+) by 9 a.m. ET on Thursday, delayed from Wednesday, and pricing is expected to firm shortly thereafter, according to a market source.

The facility, comprised of a $75 million revolver and a $350 million term loan B, is talked at Libor plus 550 bps to 575 bps with a 1.25% Libor floor, and the term loan B is being offered at a discount of 98.

Earlier in syndication, price talk on the deal was lifted from Libor plus 475 bps to 500 bps and the discount widened from 99.

Morgan Stanley & Co. Inc., ING Financial Markets LLC and RBC Capital Markets LLC are the lead banks on the deal.

INC purchasing Kendle

Proceeds from INC Research's credit facility, along with $250 million of bonds and equity, will be used to fund the acquisition of Kendle International Inc. for $15.25 per share in cash. The total equity value is roughly $232 million.

Backing the bonds is a commitment for a $250 million senior unsecured bridge loan. It is priced at Libor plus 750 basis points with a 1.25% Libor floor. The spread will step up by 50 bps every four months until it hits an 11.5% cap.

Closing on the transaction is expected in the third quarter, subject to approval by Kendle's shareholders as well as satisfaction of customary conditions and regulatory approvals.

INC Research is a Raleigh, N.C.-based therapeutically focused contract research organization privately held by Avista Capital Partners and Ontario Teachers' Pension Plan. Kendle is a Cincinnati-based clinical research organization.

Lawson buyout closes

The acquisition of Lawson Software Inc. by GGC Software Holdings Inc., an affiliate of Golden Gate Capital and Infor Global Solutions, for $11.25 per share has been completed, according to a news release. The transaction was valued at about $2 billion.

To help fund the buyout, Lawson got a new $1.115 billion senior secured credit facility consisting of a $75 million five-year revolver (Ba3), and a $1.04 billion six-year term loan (Ba3/B+) priced at Libor plus 525 bps with a 1.5% Libor floor and sold at an original issue discount of 96. The B loan has 101 soft call protection for one year.

Of the total term loan B amount, $600 million was syndicated and $440 million was held by the underwriters, with the underwriters agreeing not to sell the term loan below the 96 issue price for a period of 120 days after closing.

Lawson lead banks

Credit Suisse Securities (USA) LLC, Bank of America Merrill Lynch, Morgan Stanley & Co. Inc., RBC Capital Markets LLC and Deutsche Bank Securities Inc. were the lead banks on Lawson's credit facility.

During syndication, pricing on the term loan B was increased from Libor plus 500 bps and, before that, from Libor plus 450 bps, the discount widened from revised talk of 98 and from initial guidance of 98½ to 99, call protection was added, the maturity was shortened from seven years, and the excess cash flow sweep was increased to 75% initially from 50%.

Lawson Software is a St. Paul, Minn.-based enterprise software developer. Infor is an Alpharetta, Ga.-based provider of business software and services.

Sophos acquires Astaro

Sophos, an IT security and data protection firm that has headquarters in Boston and Oxford, England, said in a news release on Wednesday that it closed on the acquisition of Astaro, a provider of network security services that is based in Wilmington, Mass., and Karlsruhe, Germany.

Funding came from a $125 million term loan add-on led by RBC Capital Markets LLC, comprised of a $65 million piece and €42 million piece. Pricing on the U.S. debt is Libor plus 562.5 bps and pricing on the euro is Euribor plus 512.5 bps, with both having a 2% floor and sold at a discount of 991/2.

Originally, the company was going to refinance and upsize its existing credit facility with the acquisition, but as a result of market conditions, the refinancing plan was dropped.

Under the initial plan, the company was going to get a $20 million revolver, a $280 million term B and a €110 million term loan, divided into an A and B tranche. Price talk on the revolver and A loan had been Libor/Euribor plus 400 bps with no floor and a 100 bps upfront fee, and talk on the B loan had been Libor/Euribor plus 450 bps with a 1.5% floor, a discount of 99 and 101 soft call protection for one year.

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